transformation >>€¦ · top 50 china commercial real estate developer top 10 china business...

Transformation >>Building Scale in China

Strategic Investment in

Sincere Property Group

15 April 2020

➢ Introduction

➢ New Transaction Summary

➢ Financial Impact to CDL

➢ Building Scale, Creating Value

Overview

Zhengzhou Financial Island, Zhengzhou

郑州金融岛

Artist’s Impression

Starlight 68@Sincere Centre, Chongqing

重庆星光68

Introduction

ChongqingShanghai

Tianjin

Suzhou

Changzhou

Wuxi

Zhenjiang

NingboHangzhou

Chengdu

Yantai

Qingdao

Luoyang

Zhengzhou

Changsha

Kunming

Beijing

Shenzhen

About Sincere Property Group

9.2 millionsqm1

Development PropertiesLand Bank

Top 50

China CommercialReal EstateDeveloper

Top 10

China BusinessPark Developer &

Operator

Top 100

China Real EstateDeveloper

RMB 21.4 billion1

(S$4.3 billion)2019

Contracted Sales

Development

Properties

3

>2,000Employees3

5Regions

18Cities

64 projects

Investment

Properties

9 retail 13 office2

4 hotels 1serviced

residence

Comprehensive Capabilities

across multiple asset types

Notes: Data as of 31 Dec 2019, subject to further DD

1. On 100% basis

2. Includes 2 self-use offices in Shanghai and Chongqing

3. Includes staff from property development, asset management and Starlight Retail

Established real estate developer with comprehensive development and asset management capabilities across different asset types

Yangtze River Delta20%

Southwest China43%

Greater Bay Area3%

Bohai Rim22%

Central China12%

Tier 15%

Tier 291%

Tier 34%

Substantial Land Bank to Support Future Growth • Over 96% of land bank1 located in Tier 1 and 2 cities

• 42% of land bank in developed regions of Yangtze River Delta and Bohai Rim

• 58% in fast growing Southwest China (mostly Chengdu & Chongqing), Greater Bay Area and

Central China

4

Land bank by city tier2 Land bank by region

9.2

million sqm3

Notes: Data as of 31 Dec 2019

1. Total land bank equals to the sum of (i) total GFA available for sale for completed properties, (ii) total GFA for properties under development, and (iii) total GFA for properties

held for future development; GFA available for sale of completed projects refers to the saleable GFA pre-sold/unsold

2. Tier 1 cities where Sincere has presence include Beijing, Shanghai, Shenzhen; Tier 2 cities include Tianjin, Chongqing, Chengdu, Zhengzhou, Qingdao, Yantai, Suzhou,

Hangzhou, Wuxi, Ningbo, Changsha, Kunming, Changzhou; Tier 3 cities include Zhenjiang, Luoyang

3. On 100% basis

9.2

million sqm3

Mid to high-end Mass market

Sincere Arcadia,

Chongqing

(High-end villa)重庆协信·阿卡迪亚

Full spectrum ranging from high-end to

mass market (including villa, low-rise and

high-rise residential apartments)

MAIN PRODUCT LINES

High-end

Jinglan Peak,

Chongqing

重庆敬澜山

Xingluyuan,

Chongqing

重庆星麓原

Xinglanhui,

Changsha

长沙星澜汇

Tianjiao,

Qingdao

青岛天骄观澜国际

Xingluyuan,

Chengdu

成都星鹭源

Wide Range of Residential Development Products

5

Xiexin Gongguan,

Chongqing

重庆协信公馆

High-end

shopping mall

Mid to high-end urban fashion

shopping mall

Quality community

shopping mall

Strong Retail Portfolio

• Sincere has 9 retail malls across various market segments, from community to luxury

• Further expansion via third party management contracts

6

Starlight 68 (Phase 1),

Chongqing

重庆星光68 (一期)

Shibei Starlight Plaza,

Shanghai

上海市北星光广场

Nanping Starlight Place,

Chongqing

重庆南坪星光时代广场

Yubei Starlight World,

Chongqing

重庆渝北星光天地

Daping Starlight World,

Chongqing

重庆大坪星光天地

Yongchuan Starlight Plaza,

Chongqing

重庆永川星光广场

Starlight 68 (Phase 2 under

development), Chongqing

重庆星光68 (二期)

Starlight World,

Shanghai

上海星光天地

Established platform covering retail property development, management and operation

• Tusincere was jointly incorporated by Sincere and Tus Holdings in 2015

• Tus Holdings (启迪控股), is a leading science and technology investment holdings group,

leveraging on the network and resources from its parent company, Tsinghua University

• Mixed developments comprising office, residential, retail and research spaces

Leading Business Park Developer & Operator

7

Note: 1. Rating by Guandian in 2019

Shenzhen Tech Park启迪协信深圳科技园• Total GFA: approx. 800,000 sqm

• Target high-tech industries

Shanghai Chint Tus Harbor上海正泰启迪智电港• Total GFA: approx. 200,000 sqm

• Positioned as a centre for high-end

manufacturing

Wuxi Tusincere City启迪协信无锡科技城• Total GFA: approx. 800,000 sqm


Chongqing Headquarters

City重庆总部城• Total GFA: approx. 700,000 sqm


Ranked Top 10 Business Park Developer and Operator in China1

Hotels & Serviced Apartments

• A serviced residence with 404 apartments

and four hotels with more than 1,000

rooms

• Pipelines in discussion for further

expansion

8

Changfeng Serviced Apartment, Shanghai

In operation since Sep 2018

No. of rooms: 404

Chengdu Hilton Hotel

In operation since Feb 2019

No. of rooms: 298

Chongqing Jiangbei Doubletree by Hilton

In operation since Nov 2011

No. of rooms: 284

Includes high-end luxury to mass market projects

Starlight 68@Sincere Centre, Chongqing

重庆星光68

NewTransactionSummary

RMB 4.39 billion

(S$0.88 billion)

Investment

Consideration

Investment Overview

Acquisition of initial 51.01% effective stake in Sincere Property

with a Call Option for another 9.00% effective stake

Transaction Overview

• An established real estate group with over 20 years’ track record

• One of China’s Top 100 Developers1

• Contracted sales of RMB 21.4 billion2 (S$4.3 billion) in 2019

Sincere Property

10

RMB 5.16 billion

(S$1.04 billion)

RMB 0.77 billion

(S$0.16 billion)

“TRANSACTION”

Year 2020

“CALL OPTION”

Year 2022TOTAL

Effective

Equity Stake51.01% 60.01%9.00%

Renegotiated Transaction at a Significantly Lower Valuation

1. 2019 Ranking by China Real Estate Association (中国房地产业协会)2. On 100% basis

Exchange rate of RMB1 : S$0.2009 as at 14 April 2020

Notes:

Existing Holding Structure

11

Offshore

Onshore

Greenland Holdings

Offshore Hold co

100%RMB 2.75

billion loan

40%

Mr Wu Xu

60%

CDL had extended an interest-bearing

loan in 2019 to Sincere Property in the

amount of RMB 2.75 billion (representing

approximately S$0.55 billion)

Name of

shareholder

Direct interest

in Offshore

Hold Co (%)

Effective interest in

Sincere Property (%)

CDL Not applicable Not applicable

Mr Wu Xu1 100.00 60.00

Greenland

Holdings2Not applicable 40.00

Notes:

1. Mr Wu Xu is the Chairman and Founder of Sincere Property

2. Greenland Holdings Group Co., Ltd.

Interest held by Sincere Property’s Chairman & Founder and Greenland Holdings

12

Joint Controlling Stake of 51.01% to be held by CDL Group

Offshore

Onshore

Greenland Holdings

Offshore Hold co

36.25%63.75%

Mr Wu Xu

CDL’s Effective Equity Stake in Sincere

will be approximately 51.01%, becoming

the largest shareholder

Name of

shareholder

Direct interest

in Offshore

Hold Co (%)



CDL 63.75 51.01

Mr Wu Xu1 36.25 29.00

Greenland


19.99%80.01%

Structure – Transaction Completion in 2020

Notes:



Structure – Exercise of Call Option in 2022

13

Controlling Stake of 60.01% to be held by CDL Group

Offshore

Onshore

Greenland Holdings

Offshore Hold co

25%75%

Mr Wu Xu

After the exercise of the call option, CDL’s

Effective Equity Stake in Sincere Property

will be approximately 60.01%

The call option will be exercisable on the

later of (i) 18 months from completion of

transaction and (ii) 1 July 2022

Name of

shareholder

Direct interest

in Offshore

Hold Co (%)



CDL 75.00 60.01

Mr Wu Xu1 25.00 20.00

Greenland


19.99%80.01%

Notes:



Compelling Transaction Rationale

14

• Expand the Group’s geographical presence from 3 to 18 cities in China

• Increase CDL’s global portfolio allocation in China from 13% to 17%

Immediate

Scale

2

• Sincere provides local capabilities with over 2,000 professionals across 18 cities

• CDL contributes international experience, sophisticated capital management and

sustainability leadership to help strengthen and professionalise Sincere Property

4Strategic

Fit

• Access to pipeline of 64 development projects, land bank of 9.2 million sqm2

• More than 96% of the land bank in Tier 1 and 2 cities

• Broaden capabilities to include business parks

Growth

Potential

3

• Attractive entry valuation at RMB 8.60 billion

– almost 50% below Sincere Property’s NAV of RMB 16.48 billion1

• Current macroeconomic conditions offer a window of opportunity to assess real

estate investments with attractive valuations

1Attractive

Price

Notes:

1. Based on the unaudited consolidated financial statements of Sincere Property for the financial year ended 31 December 2019

2. On 100% basis

Significantly Improved Terms for New Transaction

Strategic Initiatives

CAPABILITY ENHANCEMENT

PORTFOLIO REBALANCING

SALES ACCELERATION

ASSET DIVESTMENT

TREASURY OPTIMISATION

Upon Transaction Completion, Strong Focus on These Initiatives

15

Xinhua Sincere Center, Chongqing

重庆新华协信中心

16

FinancialImpactto CDL

17

Proforma Impact to EPS

EPS Accretive Transaction – Expected 130% boost to EPS upon Transaction Completion

Assumed negative goodwill

of S$867 million based on

Sincere Property’s unaudited

NAV as at 31 December 2019

(subject to Purchase Price

Allocation Exercise)

Effect on EPS of S$0.95 per

share

0.55

1.40

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

FY 2019 Transaction Completion(Year 2020)

S$

$1.52

EPS Accretion

130%

Interest

on

Initial

Tranche

Alignment of accounting

policy – Depreciation

on investment properties

$0.61

EPS is boosted by negative goodwill but impacted by alignment of accounting policy as

CDL depreciates its investment properties vis-à-vis the fair value model

18

Proforma Impact to NAV & Net Gearing

NAV

➢ NAV boosted by the recognition of negative goodwill

➢ Excluding negative goodwill, NAV is fairly constant

11.60

12.49

11.00

11.20

11.40

11.60

11.80

12.00

12.20

12.40

12.60

31/12/2019 TransactionCompletion(Year 2020)

S$

Net Gearing1

43 43

0

5

10

15

20

25

30

35

40

45

50

31/12/2019 TransactionCompletion(Year 2020)

%

Gearing remains robust

Note:

1. Including fair value on investment properties

CDL Debt Maturity Profile

Within 1 year21%

1 to 2 years21%

2 to 3 years37%

More than 3 years

21%

Debt

Maturity

2019

S$2,039m

S$2,063m

S$3,551m

S$2,075m

Repaid 22%

Refinanced/rollover 48%

Funds set aside for 15%

repayment

Pending discussions 15%

with banks

YTD 2020

19

Proforma Impact to Total Assets

Singapore45%

China17%

US7%

UK14%

Others17%

Singapore47%

China13%

US7%

UK15%

Others18%

S$23.2

billion

S$24.3

billion

As at 31/12/2019 Upon Completion of Transaction

CDL continues to focus on its key geographical segments, with added focus on China and the UK

20

Healthy Future Revenue Recognition

21

Financial Island, Zhengzhou

郑州金融岛

Xingluyuan, Huzhou

湖州星鹭原

Tianjiaoxingcheng, Chengdu

成都天骄星城

Notes: Images are artist’s impressions

1. Include the sales of both residential and commercial GFA, on 100% basis

Pre-sold approximately RMB 23.1 billion (S$4.6 billion)1 as of end 2019, to be booked as revenue for Sincere from 2020 to 2022 upon property handover

Tusincere City, Wuxi

启迪协信无锡科技城

Xingluyuan,Chongqing

重庆星麓源Zhengdong Industrial Park, Zhengzhou

郑东科技城

Building Scale,Creating Value

– Transforming the Group’s Portfolio

Jinglan Peak, Chongqing

重庆敬澜山

23

Building Scale in World’s Most Populous Nation

WHY NOW?

➢ Window of opportunity: A rare opportunity to gain a controlling stake in a Top 100

developer in China

➢ Positive outlook: The Group remains confident of China’s strong fundamentals and

its ability to rebound and takes a long-term view of investments in China

➢ Green shoots of recovery: China’s economy will likely be the first to recover from the

COVID-19 crisis and emerge stronger

Transformation >> Establish CDL as a Major Player in China’s Property Market

Depressed Valuations triggered by COVID-19 Pandemic and Global Uncertainties

ChongqingShanghai

Tianjin

Suzhou

Changzhou

Wuxi

Zhenjiang

NingboHangzhou

Chengdu

Yantai

Qingdao

Luoyang

Zhengzhou

Changsha

Kunming

Beijing

Shenzhen

24

Charting the Next Phase of Growth in China

Enhance Expertise

2

Combine Capabilities

3

Accelerate Growth

1

Transformative Deal to Build Scale

ChongqingShanghai

Tianjin

Suzhou

Changzhou

Wuxi

Zhenjiang

NingboHangzhou

Chengdu

Yantai

Qingdao

Luoyang

Zhengzhou

Changsha

Kunming

Beijing

Shenzhen

Hotel Serviced residence

Business park

Office RetailResidential

Chongqing

Suzhou

Shanghai

5Key

regions

18 Core

cities

Multiple

Asset

types

25

1TRANSFORMATION

Current Presence

(Pre-Transaction)

Expanded Presence

(Post-Transaction)

Accelerate Growth

Achieve scale and attractive returns through immediate access to enlarged portfolio

assetasset

Commercial

portfolio

• Identify opportunities with attractive value

(e.g. during development stage)

• Seek value added opportunities

• Focus on Tier 1 and key Tier 2 cities

Potential Future Collaboration

Hong Leong Plaza,

Shanghai

Yaojiang International,

Shanghai

Hongqiao Sincere Centre

(Phase 2), Shanghai1

Note:

1. CDL acquired Hongqiao Sincere Centre (Phase 2)

Nanping Starlight

Place, Chongqing

Xinhua Sincere Centre,

Chongqing

Sincere Centre,

Qingdao

Shibei Starlight Plaza,

Shanghai

Hong Leong City Centre, Suzhou

Existing Portfolio

26

Recent Acquisition

Accelerate Growth1

TRANSFORMATION

Strong Commercial Portfolio

Office

Apartment

Rental

HotelServiced

Apartment

Business

Park

Retail

CDL’s existing platforms

and investments

Sincere Property’s product

Offerings and capabilities

Leading co-working operator

Specialises in

serviced apartment

management

Top 10 Business

Park Developer and

Operator

星光商业

27

Enhance Expertise

Fast growing apartment rental platform

International hotel owner and operator

Established platform

for retail property

development and

management

2

+

TRANSFORMATION

Support Potential Fund Management Business

Active Value Creation via Professionally Managed Platform

Boulevard 88 Amber Park

Residential

Sincere Gongguan Jinglan Peak

Significant enhancement of CDL’s overall asset management capabilities

28

Combine Capabilities

• Strong local execution capability supported by a team of over 2,000 professionals from Sincere Property

• Achieve competitive edge with Sincere Property’s local expertise and strong partnerships coupled with

CDL’s international experience, sophisticated capital management and sustainability leadership

3TRANSFORMATION

>2,000Employees across

18 cities

Extensivenetworks and

partnerships

Capital

Management

International

Experience

Innovation

Sustainability

Leverage enlarged resource pool to create competitive advantages

29

Growth, Enhancement and Transformation

MultipleAsset types

9.2 million

sqm1

18Cities

>2,000Employees

Geographic

Expansion

Substantial

Land Bank

Enhanced

Expertise

Dedicated Local

Professionals

Note:

1. On 100% basis

Disclaimer:

This document may contain forward-looking statements that involve

assumptions, risks and uncertainties. Actual future performance, outcomes

and results may differ materially from those expressed in forward-looking

statements as a result of a number of risks, uncertainties and assumptions.

Representative examples of these factors include (without limitation) general

industry and economic conditions, interest rate trends, cost of capital and

capital availability, availability of real estate properties, competition from other

developments or companies, shifts in customer demands, customers and

partners, expected levels of occupancy rate, property rental income, charge

out collections, changes in operating expenses (including employee wages,

benefits and training costs), governmental and public policy changes and the

continued availability of financing in the amounts and the terms necessary to

support future business. You are cautioned not to place undue reliance on

these forward-looking statements, which are based on the current view of

management on future events. Numbers in tables and charts may not add up

due to rounding.

Jinglan Peak, Chongqing

重庆敬澜山

www.cdl.com.sg

transformation >>€¦ · top 50 china commercial real estate developer top 10 china business...

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